Do you need a listing agreement to sell a house?
What to know when selling a house: the listing agreement
One of the most common ways to sell a house is by working with a real estate agent. As of 2023, around 89% of homeowners in the United States sell their houses through an agent, according to the NAR (National Association of Realtors®). When you work with a real estate agent, you will need to sign a legal document known as a listing agreement. If you decide to sell your house with an agent, it is important to know what a listing agreement is and how it works.
What is a listing agreement?
A listing agreement is a legal contract that outlines the roles and expectations between the seller and their agent during a home sale. This document lays out the specific terms, agreed upon by both parties, in which the real estate agent can market to potential home buyers. This agreement offers protection for the seller from an agent who doesn’t provide the promised service, as well as a promise of payment for the real estate agent for rendered services.
Common types of listing agreements
When you hire an agent, there are a few different types of listing agreements you can use to sell your house.
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Exclusive right-to-sell agreement: In this type of listing agreement, the real estate agent is responsible for the sale of the house. This includes marketing, finding a buyer, and assisting with the closing process. In return, they are promised the full amount of commission from the home sale. An exclusive right-to-sell agreement is the most common type of listing agreement used in real estate transactions.
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Exclusive agency listing agreement: Instead of working with a single agent, some sellers choose to work with a brokerage or a team of real estate agents. In this type of listing agreement, any agent in the agency is able to sell the house. Additionally, the homeowner reserves the right to sell their house FSBO (for sale by owner). In this case, they will not have to pay any real estate commission, but they will then be responsible for the entire selling process, from initial listing to closing.
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Open listing agreement: An open listing agreement is an agreement in which the homeowner pays an agent commission only if the property is sold through the agent’s own effort. This type of listing agreement is less common, as an agent usually only agrees to an open listing if they already have a buyer in mind.
What is a net listing?
Another type of listing agreement is known as a net listing. A net listing is a document used when the homeowner wants to set a minimum price that they will accept for their home sale. When you agree to a net listing, the real estate agent will keep whatever surplus occurs from the sale instead of earning a commission. That means if your agent sells your house above the listing price you set in your agreement, then the agent gets the difference. A net listing is only available in the states of Florida, Texas, and California. A net listing can benefit the homeowner if they set a good minimum price, as the agent will be incentivized to sell the property at a higher price in order to profit from the sale.
What’s included in a listing agreement?
A listing agreement will cover many different aspects of a real estate transaction, including:
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Commission rate: Within a listing agreement, your agent’s commission rate will be established. The average real estate agent commission ranges between 5%–6% of the sale price of your house.
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Contract length: Listing agreements will include the duration of the agreement, typically between 3 and 6 months, as well as the date of expiration. This can be adjusted to accommodate the homeowner’s projected timeframe for selling their house.
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Listing price: When you hire a real estate agent, they can recommend a set listing price using market data and comparable local home sales.
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Marketing plan: A listing agreement will include a plan on how your agent will advertise your house. This can involve listing your property on the Multiple Listing Service (MLS), arranging open houses, and utilizing social media.
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Clauses: Two important components that are included in a listing agreement are dispute clauses and termination clauses. A dispute clause determines how parties will mediate any potential conflicts. A termination clause provides conditions under which the homeowner can end the contract without penalty if an agent isn’t performing their duties. This section will also normally include a protection clause for your real estate agent.
What is a protection clause?
In a listing agreement, protection clauses are included to guard the interests of the agent. A protection clause is included to ensure that the real estate agent can receive their commission, in the case that the agreement expires during the course of the sale. Listing agreements usually have an expiration date set 60 to 180 days after signature. Sometimes, the closing period can take longer than expected—if the agreement expires after the agent has found a buyer, a protection clause guarantees their payment. On the other hand, if the expiration date passes before your real estate agent has found a buyer, you are then legally able to part ways with your agent.
Can you make changes to a listing agreement as you sell your house?
While a listing agreement is a legally binding document, it can be revised as needed. You can extend the length of your agreement by pushing back the expiration date. You can also make changes to your listing price or how your agent is marketing your house. When you make changes to your listing agreement, your real estate agent will send you an addendum highlighting the sections that have been changed. For the changes to be valid, both the seller and agent need to sign the addendum.
Do you have to sign a listing agreement when selling your house?
When you decide to sell your house with a real estate agent, you will need to sign a listing agreement. Some agents may give you an initial consultation without paperwork, but they will not help you sell your house without the legal security that comes with this contract. If you do not want to sign a listing agreement to sell your house, you may want to consider selling FSBO or selling to an off-market home buyer like us.
Can you get out of your listing agreement after signing?
Listing agreements typically last anywhere from 60 to 180 days from the date of signature. While you can terminate a listing agreement, you may want to consult with an attorney to make sure that you comply with all the contract terms. You should keep in mind that you may have to pay your agent a fee for exiting the contract if there is a severance clause.
Sell your house without an agent to an off-market home buyer.
Do you need a listing agreement when selling your house? Not when you work with We Buy Ugly Houses®. We’re home buyers with more than 25 years of experience helping homeowners get an easier home sale. Listing agreements can be complicated and time-consuming—we strive to simplify the selling process. When you work with us, you’re selling directly to a buyer instead of finding one through an agent. This means:
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You avoid paperwork and commissions: Working with off-market home buyers like us means that you don’t need to sign a contract with an agent to sell your house. You can get an offer quickly and sell directly to an interested buyer, without paying any commissions or typical closing costs.†
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You get a fast home sale: Real estate agents can take months to find a buyer, and it can take weeks to close on your home sale. Even with a real estate agent, finding a buyer isn’t guaranteed. When you choose We Buy Ugly Houses as your off-market home buyer, we can sometimes take you from offer to closing in as little as 3 weeks.
Ready to skip the hassle of a listing agreement and sell your house to one of America’s most trusted home buyers? Contact us today to get a free consultation toward a fast offer.
This blog is for informational purposes only and should not be considered legal advice.
